A pair of federal judges in South Carolina has joined a growing national trend in finding that recent U.S. Supreme Court decisions requiring heightened pleading requirements from plaintiffs are not applicable to affirmative defenses raised by defendants.
For nearly a decade now, the federal judiciary has been sorting out the ramifications of a pair of blockbuster decisions handed down by the Supreme Court, in 2007 and 2009, which made it harder for plaintiffs to sue in federal court.
In the first, Bell Atlantic Corp. v. Twombly, the court held that a plaintiff must include enough facts in its complaint to make it plausible, rather than merely conceivable, that it will be able to prove facts to support its claims. In the second, Ashcroft v. Iqbal, the court elaborated on the Twombly standard and held that it was applicable in all federal civil litigation. The two cases often are nicknamed “Twiqbal.”
The high court said nothing about whether the same elevated standard should also apply to affirmative defenses to a claim, however, and the district courts that have considered the question have split on the issue. In the early going, most courts found that affirmative defenses were subject to the Twiqbal standard, but more recently the trend has been for courts to find the standard inapplicable, and this has since become the majority position.
Judge Richard Gergel considered the issue in a June 9 opinion handed down in a patent infringement case in which the defendant had raised a number of affirmative defenses. Gergel noted that decisions in the District of South Carolina had split on the issue, but cited a decision in May of this year by fellow Judge Cameron McGowan Currie opted not to apply the higher standard.
Gergel said he found the reasoning employed by Currie and like-minded judges persuasive based on the text of the Federal Rules of Civil Procedure. He denied the motion by the plaintiffs, all subsidiaries of the conglomerate Honeywell International, to strike the affirmative defenses raised by The Code Corporation, a smaller competitor in the market for two-dimensional health care barcode readers.
A patently bad idea
The dispute also implicated another knotty legal issue over Code’s counterclaims for injurious falsehood and tortious interference related to statements Honeywell employees allegedly made to Code’s customers. Ordinarily, in the context of a patent infringement lawsuit, such counterclaims would be barred under the federal Patent Act, which preempts state law claims.
But Gergel allowed Code’s counterclaims to move forward, writing that the preemption applies only where communications made by a patentee “make its rights known to a potential infringer.” Code alleges that Honeywell strayed beyond that, with Honeywell sales representatives telling Code’s customers that the lawsuit would “bury Code” and “put Code out of business.”
“Comments about Code’s viability as a going concern and the economic impact of a patent suit on Code have nothing to do with Honeywell’s patent rights, and so the Patent Act does not preempt state laws that may make those comments actionable,” Gergel ruled.
Sally Newman of Charleston Legal Access in Charleston served as local counsel for Code along with attorneys from McKool Smith in Dallas, Texas. Newman did not respond to a phone call seeking comment.
Walker Coleman, Jennifer Thiem and Richard Farrier of K&L Gates served as local counsel for Honeywell, along with other attorneys from that firm. The firm was unable to arrange for the attorneys to comment in time for the print edition of this story.
The 12-page decision is Hand Held Products, Inc. v. Code Corp. (Lawyers Weekly No. 002-157-17). An opinion digest is available online at sclawyersweekly.com.
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